What is political risk?

This is the risk that a buyer cannot pay or that goods cannot be delivered due to circumstances outside of your or your buyer’s control. These circumstances usually include war, terrorism, riots, and actions by (local) governments, such as changes in export or import regulations that affect the outcome of the transaction. Some policies also include natural disasters as a cause of loss under this heading. There may be a risk that money cannot be transferred from one country to another due to measures taken in the country where your buyer is based. This is also considered a political risk. Failure to pay by a public buyer is always considered a political risk.

Receivables Insurance Association of Canada for trade credit and political
risk

The Receivables Insurance Association of Canada (RIAC) promotes the business opportunity for receivables insurance – also known as trade credit insurance – to Canadian insurance brokers, the banking industry and businesses engaged in domestic trade and exporting that is subject to trade and/or political risk.

RIAC also works to advance industry innovation and product integrity, solve any business problems related to government legislation, and represent the interests of its members by facilitating an open exchange of information and ideas.